General Information
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Target Audience
This course is of interest to (a) those in investment banking, consulting, and law, whose careers will involve interactions with private equity. (b) those seeking financing for a venture, (c) those interested in working in private equity and venture capital, (d) those interested in investing in private equity, This course is part of the Finance emphasis and the Innovation, Entrepreneurship and Business Design emphasis.
Format
Case discussions, lecture, and general class discussion, with occasional professional visitors.
Course Mission
The primary objective of the course is to improve students’ ability to understand the concepts and institutions involved in entrepreneurial finance and private equity. Private equity firms, both those that specialize in venture capital and those that focus on leveraged buyouts, have demonstrated an ability to create value by acting as a financial intermediary, between firms and ultimate investors. The course will provide students with skill sets so they can analyze and understand entrepreneurial financing opportunities and private equity from multiple perspectives: the perspective of the individual/firm seeking and receiving private equity financing for their project; the perspective of the private equity fund (GP); and, the perspective of the limited partners (LP) that provide finance for private equity funds. The course utilizes tools and frameworks from economics, finance, strategy, accounting and law, applying them to case situations.
Course Scope
The course will be divided into three sections:
Users of private equity – This section focuses on the challenges entrepreneurs/managers face in attracting finance to fund their ideas. Students will be required to apply a qualitative framework to assess an idea; to apply a quantitative framework to value the opportunity; and to understand the role of contracts to align incentives for value creation.
Private equity partnerships – This section focuses on issues private equity partnerships face when they evaluate, choose and manage private equity investments. This section evaluates methodologies as well as possible ways to improve them.
Private Equity investors – This section focuses on the challenges facing private equity investors, be they endowments, pension plans, family offices, or fund managers. The section highlights issues in performance measurement and the evolution of the industry.
Evaluation and Grade Breakdown
| Component | Due Date | Weight |
|---|---|---|
| Class Participation | Ongoing | 20% |
| Case Write-ups, Problem Sets | Ongoing | 10% |
| Midterm Quiz | TBC | 10% |
| Presentation | Last 2 weeks of classes | 25% |
| Final Exam | During exam period | 35% |
Required Resources
Course package of case studies and textbook, “Venture Capital and the Finance of Innovation,” by Andrew Metrick and Ayako Yasuda (2021).